Capital Accumulation, Technological Progress, and Knowledge
The chapter presents the main determinants of economic growth and their relevance in the US economy in the period 1950–2017. A rapid capital accumulation, accompanied by substantial technological progress and a strong rise in knowledge, can determine a good economic performance. There is, however, a complex feedback between these three determinants. In the 1950s, the US started from very good levels in the stocks of physical capital, technology, and knowledge, but gradually lost part of its advantages, especially as regards manufacturing production, vis-à-vis Western European countries, Japan, and the four Asian tigers, and more recently also in relation to large emerging countries, such as China and India. The US tried to react by delocalizing a large part of its production abroad and developing new lucrative services, especially in the financial sphere, in ICT, and in the internet economy. The US could do so because of its innovative drive, but also because it was able to attract massive flows of capitals and a large number of scientists and experts from other countries. However, in the last decades, there has been a powerful backlash, that is, the rapid growth in competitiveness of some of the advanced and emerging countries, such as Germany and China, and the consequent deindustrialization of the US economy and its large structural deficit in the balance of current accounts.
KeywordsDeterminants of economic development Technological progress Capital accumulation Knowledge Industrial revolutions
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